Cash?! Where We’re Going, We Don’t Need Cash! (Japan's Electronic Money Services - Part 1)

Miso Dog
Hey Misoko! What is electronic money? Sounds pretty techy.
It is money that is not regular money. Essentially being able to make payments without actually trading cash.
Miso Dog
Sounds confusing. I'm interested in trying it out, but I'm not sure about using it.
With many differences, it can indeed be confusing. Today, I will introduce the basics of electronic money and the differences between services so that you can get started soon!

As technology advances, so does the way we live and conduct our daily business. Throughout civilization, our idea of currency and its usage has gone from trading/bartering to coins and bills as well as credit cards. Now, in the age of smartphones and other smart devices, we have arrived at electric money.

With the introduction of smartphones, services have expanded to include putting money on these devices and linking them to financial institutions thanks to the internet. As the services grew, so did the number of countries and stores that support them. Japan is no exception. Today we will go over electronic, cashless money in Japan and the major services supporting them.

Electronic Money? What is it?

A little bit of history

Japan’s history with electronic, cashless, or denshi money, started in 1996 with the introduction of the service, “Felica” by Sony. This was followed by JR East’s “Suica” service. These two services served as the beginning and foundation of electronic money in Japan. “Felica” was then used as a base for Edy in 2002, which is now a part of Rakuten. Since then, there has been an explosion in the number of services available for people. So many, it is difficult to determine which one(s) to use.

What is it?

Denshi money, or electronic money, is a payment system that is cashless and is done via electronic payment. This is commonly completed using cellphones and, more recently, smartphones. This payment system allows users to complete payments at stores, restaurants, etc. without using physical cash. Everything can be done by just taking out your mobile device and holding it over a scanner. There are different varieties of electronic money, ranging from cards to applications on mobile devices.

Differences between Electronic Money and Credit Cards

Credit Cards

Credit cards also require a screening process when signing up for one. The difference when using a credit card at stores and restaurants is that you will need to pull out your credit card and hand it to the cashier.
Also, credit cards are traditionally a post-paid system. This means that the credit card company will pay for your purchase, and you will then have to pay for the purchase later when your credit card bill is due.

Electronic Money

In most cases, electronic money does not require a screening process when signing up for the service. When using this method of payment, you do not need to show a card when you use a mobile application or your mobile device. There are other services which do use cards. However, you do not need to sign anything. You merely tap the card or device on the receiving device at the establishment you are at.

While credit cards are post-paid, electronic money can be prepaid, post-paid, and debit. Prepaid refers to adding money to the service. Post-paid is where you link your credit card to the cashless system to make payments. The payments will automatically be charged to your credit card, or you can auto-fill/charge your service using your credit card.

Debit refers to linking your debit or bank account with the electronic money service.

The last difference is linking your electronic money account to a separate service partnered with the electronic money company. One of the main examples involves connecting your account with your mobile service provider. The money used in the cashless service is charged to your monthly mobile bill.

Pros & Cons of Electronic Money

 Credit CardElectronic Money
SetupScreening ProcessIn most cases, screening is not necessary
RequirementsBank Account- Sometimes a bank account or credit card. Some services do not require either. (Depends on the system)

- Mobile device (Depends on service)

TransactionsPost-paid (Pay bill at a later date)Prepaid / Post-paid / Debit options available
Ease of UseHand over credit card and signatureTap the card or your mobile device on the receiving device to complete payment
Adding MoneyJust make sure you pay your bills on time- Charge your account balance via credit card, cash, bank account, etc.

- Charging at the convenience store is also an option for certain services

Points & DiscountsCertain credit cards offer points and mileage- Certain services offer points and discounts with usage


You can use some form of electronic money in Japan at almost all stores and restaurants in major cities and certain rural areas. Most services now use mobile devices such as cellphones and smartphones. Depending on the service that is used, device, and settings, the usage may vary.


A few of the electronic money services use cards to complete payments and such. One example is transportation services, mainly Suica and Pasmo (both mainly used in/around Tokyo). These types of cards have IC (Integrated Circuit) chips inside them that hold information and communicates with the service to conduct transactions. Suica and Pasmo are used not only for public transportation fares but also for making payments. You just need to hold the card over the receiver at the store to complete purchases. These are the same receivers as the ones used for mobile devices.

Mobile device

Most of the services require that you download a separate application to use the service with mobile devices. This usually only involves downloading the application from the Google Play or iOS App Store and logging in to your account or make a new account. After the initial setup, all that is left is figuring out how you will charge/pay for the electronic money and then use it. Making purchases is as easy as tapping your device on the store’s receiver, showing a barcode on your device, or scanning a store’s QR code and entering the payment amount.

Charging and Billing

Charging Your Account Balance

In most cases, you will need a balance to use electronic money. Adding money to the electronic money account differs depending on the service and the type of payment system.

Prepaid System

Add money to your account before you can use the electronic money.

Use cash to add money at the Convenience Store ATM and train/subway ticket machines.

Postpaid System

Combine the cashless service with your credit card service so that the money is automatically added to your credit card bill.

Partnership Service

This involves linking the system with another service you are using. For example, linking your mobile carrier’s account to the electronic money system so that the usage will show up on your monthly mobile bill.

Depending on how you wish to add or charge money to your electronic money service, there many different payment options available. For those who are concerned about spending too much, you might want to consider a prepaid system. This way, you can keep track of how much money is left, so you do not overspend. The postpaid and debit systems where you use your credit card with the system may be easier for those who prefer convenience and speed. For individuals with multiple services, linking your account with another service’s account will allow you to combine all your payments into one.

In Conclusion

Now that we have discussed the basics of electronic money in Japan, you should see the differences between traditional payment systems and electronic money. The next step is to decide which service to use in your daily life. To help you with this, view our list of recommended services in Part 2 of this article and see which one fits your needs best!




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